Tanahu Hydropower Project has extended compensation of Rs210 million to private landowners of the district whose land will be acquired to build 140MW storage project.

The compensation was provided after private landowners agreed to relinquish their land where they had built houses and cattle sheds or planted crops and trees. The land was acquired as it would be inundated by the hydropower project.

“The project aims to complete compensation distribution process for this fiscal year before the end of the year in mid-July. So, we have expedited compensation distribution process,” said Sachen Gautam, communications expert at the project office.

The government had allotted Rs420 million for compensation distribution in this fiscal year. “The entire amount will be distributed by the end of this fiscal year,” Gautam said. The project has to acquire a total of 1,200 ropanies of land which will cost Rs600 million.

Private land is being acquired at a rapid pace as the project aims to begin construction by the end of September.

Currently, Tanahu Hydropower Limited, a subsidiary of state-owned Nepal Electricity Authority, under the leadership of Lahmeyer International, a consultant to the project, is evaluating documents submitted by contractors interested in building the project. 

The project will be one of Nepal’s biggest storage-type projects with an estimated annual energy generation capacity of 587.7 GWh for the first 10 years and 489.9

GWh from the 11th year. The project can generate energy for six hours per day during the dry season.

The project is being co-funded by the Asian Development Bank (ADB), the Japan International Cooperation Agency (Jica) and European Investment Bank (EIB).

A loan agreement of $150 million was signed with the ADB on February 21, 2013. A similar loan agreement of $183 million was signed with Jica on March 13, 2013, and the agreement with the European Investment Bank (EIB) was signed on May 7, 2013 for a loan of $70 million, which was later raised to $85 million.

Funds from the government and NEA will be used to build infrastructure in the pre-construction phase. The project is estimated to cost $505 million and the Nepal government will invest $71 million.

According to NEA officials, design preparation and construction of a bridge has begun at the project site. The environmental impact assessment was done in 2009.  Considering the project’s estimated cost, it will need to sign a power purchase agreement with NEA at at least Rs7 per unit. The government has said it will extend credit to NEA at an interest rate not higher than what the multilateral lending institutions are charging. However, the government will charge NEA one percent of the loan amount as processing and guarantee fees. NEA will have to bear the risk of exchange rate fluctuation on its own.